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Employee or contractor?
May 08, 2007 by Ross Runkel at LawMemo
Sometimes it's a fine line between an "employee" and an "independent contractor."
What about people who make clothing at home?
Vermont's Employment Security Board determined that the individuals who make clothing at home for the Fleece on Earth company were employees for purposes of assessing unemployment taxes on the employer. The Vermont Supreme Court agreed, on a 3-2 vote. Fleece on Earth v. Dept of Employment (Vermont 05/04/2007).
The employees worked at home, were paid by the piece, owned their machines, worked at their own pace, and presented a bill at the end of each month. Fleece on Earth provided the patterns and yarn for the knitters, provided the patterns and pre-cut fabric for the sewers, designed the clothing, set the price per piece with occasional negotiations, and retained the right to reject pieces.
The primary issue was whether the individual had been and will continue to be free from the control or direction over the performance of such services, both under his contract of service and in fact (21 VSA section 1301(6)(B)(i)). The employer argued that the control test was essentially the common law master-servant test. The court disagreed. Noting that the Unemployment Compensation Act sought to protect workers and envisioned employment broadly, the court concluded that the degree of control and direction over production of a retailer's product was no different when the sweater was knitted at home at midnight than if it were produced between nine and five in a factory.
The DISSENT argued that the employer did not supervise or direct the employees' performance and that specifying a result only indicated independent contractor status.
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Editor: Ross Runkel, Professor of Law Emeritus. email Ross@LawMemo.Com, Phone 503-399-8028. Copyright LawMemo, Inc.
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